IDEAS home Printed from https://ideas.repec.org/p/pra/mprapa/92050.html
   My bibliography  Save this paper

Innovation and Income Inequality: World Evidence

Author

Listed:
  • Benos, Nikos
  • Tsiachtsiras, Georgios

Abstract

In this paper we explore the effect of innovation on income inequality using annual country panel data for 29 countries. We demonstrate that innovation activities reduce personal income inequality by matching patents from the European Patent Office with their inventors. Our findings are supported by instrumental variable estimations to tackle endogeneity. The results are also robust with respect to various inequality measures, alternative quality indexes of innovation, truncation bias, the use of patent applications together with granted patents and different ways to split or allocate patents.

Suggested Citation

  • Benos, Nikos & Tsiachtsiras, Georgios, 2019. "Innovation and Income Inequality: World Evidence," MPRA Paper 92050, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:92050
    as

    Download full text from publisher

    File URL: https://mpra.ub.uni-muenchen.de/92050/1/MPRA_paper_92050.pdf
    File Function: original version
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Philippe Aghion & Peter Howitt & Susanne Prantl, 2015. "Patent rights, product market reforms, and innovation," Journal of Economic Growth, Springer, vol. 20(3), pages 223-262, September.
    2. Facundo Alvaredo & Anthony Atkinson & Lucas Chancel & Thomas Piketty & Emmanuel Saez & Gabriel Zucman, 2016. "Distributional National Accounts (DINA) Guidelines : Concepts and Methods used in WID.world," Working Papers halshs-02794308, HAL.
    3. Bryan Kelly & Dimitris Papanikolaou & Amit Seru & Matt Taddy, 2021. "Measuring Technological Innovation over the Long Run," American Economic Review: Insights, American Economic Association, vol. 3(3), pages 303-320, September.
    4. Edinaldo Tebaldi & Bruce Elmslie, 2013. "Does institutional quality impact innovation? Evidence from cross-country patent grant data," Applied Economics, Taylor & Francis Journals, vol. 45(7), pages 887-900, March.
    5. Robert M. Solow, 1956. "A Contribution to the Theory of Economic Growth," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 70(1), pages 65-94.
    6. Philippe Aghion & Ufuk Akcigit & Antonin Bergeaud & Richard Blundell & David Hemous, 2019. "Innovation and Top Income Inequality," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 86(1), pages 1-45.
    7. Stephen Nickell, 1997. "Unemployment and Labor Market Rigidities: Europe versus North America," Journal of Economic Perspectives, American Economic Association, vol. 11(3), pages 55-74, Summer.
    8. Simona Iammarino & Andrés Rodriguez-Pose & Michael Storper, 2019. "Regional inequality in Europe: evidence, theory and policy implications," Journal of Economic Geography, Oxford University Press, vol. 19(2), pages 273-298.
    9. Ricardo J. Caballero & Adam B. Jaffe, 1993. "How High Are the Giants' Shoulders: An Empirical Assessment of Knowledge Spillovers and Creative Destruction in a Model of Economic Growth," NBER Chapters, in: NBER Macroeconomics Annual 1993, Volume 8, pages 15-86, National Bureau of Economic Research, Inc.
    10. Luciano Fanti & Luca Gori, 2011. "A Note on Trade Unions, Unemployment Insurance, and Endogenous Growth," Eastern Economic Journal, Palgrave Macmillan;Eastern Economic Association, vol. 37(2), pages 270-280.
    11. Daron Acemoglu & James A. Robinson & Thierry Verdier, 2012. "Can't We All Be More Like Scandinavians? Asymmetric Growth and Institutions in an Interdependent World," NBER Working Papers 18441, National Bureau of Economic Research, Inc.
    12. Neil Lee & Andrés Rodríguez-Pose, 2013. "Innovation and spatial inequality in Europe and USA," Journal of Economic Geography, Oxford University Press, vol. 13(1), pages 1-22, January.
    13. Ozan Hatipoglu, 2012. "The relationship between inequality and innovative activity: a S chumpeterian theory and evidence from cross‐country data," Scottish Journal of Political Economy, Scottish Economic Society, vol. 59(2), pages 224-248, May.
    14. Breschi, Stefano & Lissoni, Francesco, 2001. "Knowledge Spillovers and Local Innovation Systems: A Critical Survey," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 10(4), pages 975-1005, December.
    15. Bronwyn H. Hall & Adam B. Jaffe & Manuel Trajtenberg, 2001. "The NBER Patent Citation Data File: Lessons, Insights and Methodological Tools," NBER Working Papers 8498, National Bureau of Economic Research, Inc.
    16. David S. Abrams & Ufuk Akcigit & Jillian Popadak, 2013. "Patent Value and Citations: Creative Destruction or Strategic Disruption?," PIER Working Paper Archive 13-065, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania.
    17. Cohen, Wesley M & Levinthal, Daniel A, 1989. "Innovation and Learning: The Two Faces of R&D," Economic Journal, Royal Economic Society, vol. 99(397), pages 569-596, September.
    18. Philippe Aghion & Nick Bloom & Richard Blundell & Rachel Griffith & Peter Howitt, 2005. "Competition and Innovation: an Inverted-U Relationship," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 120(2), pages 701-728.
    19. Sunil Kanwar & Robert Evenson, 2003. "Does intellectual property protection spur technological change?," Oxford Economic Papers, Oxford University Press, vol. 55(2), pages 235-264, April.
    20. Philippe Aghion & Xavier Jaravel, 2015. "Knowledge Spillovers, Innovation and Growth," Economic Journal, Royal Economic Society, vol. 0(583), pages 533-573, March.
    21. N. Gregory Mankiw & David Romer & David Weil, 1990. "A Contribution to the Empirics of Economic Growth," Working Papers 1990-24, Brown University, Department of Economics.
    22. Ernest Miguelez, 2013. "How does geographical mobility of inventors influence network formation?," WIPO Economic Research Working Papers 07, World Intellectual Property Organization - Economics and Statistics Division, revised Apr 2013.
    23. Sébastien Breau & Dieter F. Kogler & Kenyon C. Bolton, 2014. "On the Relationship between Innovation and Wage Inequality: New Evidence from Canadian Cities," Economic Geography, Clark University, vol. 90(4), pages 351-373, October.
    24. Frederick Solt, 2016. "The Standardized World Income Inequality Database," Social Science Quarterly, Southwestern Social Science Association, vol. 97(5), pages 1267-1281, November.
    25. Hamid Beladi & Sugata Marjit & Xinpeng Xu & Lei Yang, 2016. "Strategic Enforcement, Intellectual Property Rights, And Contractual R&D," Economic Inquiry, Western Economic Association International, vol. 54(4), pages 1904-1917, October.
    26. Maurizio Iacopetta, 2009. "Technological progress and inequality: an ambiguous relationship," Springer Books, in: Uwe Cantner & Jean-Luc Gaffard & Lionel Nesta (ed.), Schumpeterian Perspectives on Innovation, Competition and Growth, pages 181-201, Springer.
    27. N. Gregory Mankiw & David Romer & David N. Weil, 1992. "A Contribution to the Empirics of Economic Growth," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 107(2), pages 407-437.
    28. Hanna K. Szymborska, 2016. "Financial Sector T Nsformation And Income Inequality– An Empirical Analysis," "e-Finanse", University of Information Technology and Management, Institute of Financial Research and Analysis, vol. 12(2), pages 36-48, October.
    29. Andrés Rodríguez-Pose & Vassilis Tselios, 2010. "Inequalities in income and education and regional economic growth in western Europe," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 44(2), pages 349-375, April.
    30. Pakes, Ariel S, 1986. "Patents as Options: Some Estimates of the Value of Holding European Patent Stocks," Econometrica, Econometric Society, vol. 54(4), pages 755-784, July.
    31. Weijie Luo & Andrew Pickering & Paulo Santos Monteiro, 2017. "Inequality and the Size of Government," Discussion Papers 17/02, Department of Economics, University of York.
    32. Chu, Angus C. & Shen, Guobing & Zhang, Xun, 2017. "Imports and Intellectual Property Rights on Innovation in China," MPRA Paper 81706, University Library of Munich, Germany.
    33. Pablo D'Este & Frederick Guy & Simona Iammarino, 2013. "Shaping the formation of university--industry research collaborations: what type of proximity does really matter?," Journal of Economic Geography, Oxford University Press, vol. 13(4), pages 537-558, July.
    34. Franco Malerba & Maria Mancusi & Fabio Montobbio, 2013. "Innovation, international R&D spillovers and the sectoral heterogeneity of knowledge flows," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 149(4), pages 697-722, December.
    35. Joshua Lerner, 1994. "The Importance of Patent Scope: An Empirical Analysis," RAND Journal of Economics, The RAND Corporation, vol. 25(2), pages 319-333, Summer.
    36. Antonelli, Cristiano & Gehringer, Agnieszka, 2017. "Technological change, rent and income inequalities: A Schumpeterian approach," Technological Forecasting and Social Change, Elsevier, vol. 115(C), pages 85-98.
    37. Nikos Benos & Stelios Karagiannis, 2018. "Inequality And Growth In The United States: Why Physical And Human Capital Matter," Economic Inquiry, Western Economic Association International, vol. 56(1), pages 572-619, January.
    38. Lee Branstetter & Raymond Fisman & C. Fritz Foley, 2005. "Do Stronger Intellectual Property Rights Increase International Technology Transfer? Empirical Evidence from U.S. Firm-Level Data," NBER Working Papers 11516, National Bureau of Economic Research, Inc.
    39. Ron Boschma, 2005. "Proximity and Innovation: A Critical Assessment," Regional Studies, Taylor & Francis Journals, vol. 39(1), pages 61-74.
    40. Vassilis Tselios, 2011. "Is Inequality Good for Innovation?," International Regional Science Review, , vol. 34(1), pages 75-101, January.
    41. Francesco Forte & Cosimo Magazzino, 2011. "Optimal Size Government and Economic Growth in EU Countries," Economia politica, Società editrice il Mulino, issue 3, pages 295-322.
    42. Mariagrazia Squicciarini & Hélène Dernis & Chiara Criscuolo, 2013. "Measuring Patent Quality: Indicators of Technological and Economic Value," OECD Science, Technology and Industry Working Papers 2013/3, OECD Publishing.
    43. Neil Lee, 2011. "Are Innovative Regions More Unequal? Evidence from Europe," Environment and Planning C, , vol. 29(1), pages 2-23, February.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Lawrence Adu Asamoah & Francesco Figari & Andrea Vezzulli, 2021. "Spillover effects of innovation and entrepreneurial activity on income inequality in developing countries: A spatial panel approach," Regional Science Policy & Practice, Wiley Blackwell, vol. 13(5), pages 1661-1686, October.
    2. Marinko Skare & Beata Gavurova & Martin Rigelsky, 2024. "Transforming power of research and development on inequality and well-being: a European Union perspective within the circular economy framework," Palgrave Communications, Palgrave Macmillan, vol. 11(1), pages 1-16, December.
    3. Murat Cetin & Harun Demir & Selin Saygin, 2021. "Financial Development, Technological Innovation and Income Inequality: Time Series Evidence from Turkey," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 156(1), pages 47-69, July.
    4. Sun, Yang & Easaw, Joshy & Logothetis, Vassilis, 2023. "Assessing the Institutions-Innovation Channel within the Inequality-Growth Nexus," Cardiff Economics Working Papers E2023/21, Cardiff University, Cardiff Business School, Economics Section.
    5. Asma Kanwal & Nwakego Eyisi, 2023. "Income Inequality and Frontend Innovation: Evidence from Frontier Markets," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 14(1), pages 255-286, March.
    6. Brzezinski, Michal, 2022. "Does income redistribution impede innovation?," Research Policy, Elsevier, vol. 51(10).
    7. Audu, Solomon & Gbadamosi, Jumoke, 2021. "Innovation and Social Inequalities in Africa," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 5(12), pages 12-16, December.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Benos, Nikos & Tsiachtsiras, Georgios, 2018. "Innovation and Inequality: World Evidence," MPRA Paper 89217, University Library of Munich, Germany.
    2. Thanos Fragkandreas, 2022. "Three Decades of Research on Innovation and Inequality: Causal Scenarios, Explanatory Factors, and Suggestions," Working Papers 60, Birkbeck Centre for Innovation Management Research, revised Feb 2022.
    3. De Visscher, Stef & Eberhardt, Markus & Everaert, Gerdie, 2020. "Estimating and testing the multicountry endogenous growth model," Journal of International Economics, Elsevier, vol. 125(C).
    4. Asma Kanwal & Nwakego Eyisi, 2023. "Income Inequality and Frontend Innovation: Evidence from Frontier Markets," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 14(1), pages 255-286, March.
    5. Emanuela Marrocu & Raffaele Paci & Stefano Usai, 2022. "Direct and indirect effects of universities on European regional productivity," Papers in Regional Science, Wiley Blackwell, vol. 101(5), pages 1105-1133, October.
    6. Davide Fiaschi & Andrea Mario Lavezzi & Angela Parenti, 2018. "Does EU cohesion policy work? Theory and evidence," Journal of Regional Science, Wiley Blackwell, vol. 58(2), pages 386-423, March.
    7. Philippe Aghion & Ufuk Akcigit & Antonin Bergeaud & Richard Blundell & David Hemous, 2019. "Innovation and Top Income Inequality," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 86(1), pages 1-45.
    8. Sinha, Avik & Sengupta, Tuhin & Kalugina, Olga & Gulzar, Muhammad Awais, 2020. "Does distribution of energy innovation impact distribution of income: A quantile-based SDG modeling approach," Technological Forecasting and Social Change, Elsevier, vol. 160(C).
    9. Antonelli, Cristiano & Tubiana, Matteo, 2023. "The rate and direction of technological change and wealth and income inequalities in advanced countries," Technological Forecasting and Social Change, Elsevier, vol. 191(C).
    10. Johanna Vogel, 2015. "The two faces of R&D and human capital: Evidence from Western European regions," Papers in Regional Science, Wiley Blackwell, vol. 94(3), pages 525-551, August.
    11. Joscha Beckmann & Marek Endrichs & Rainer Schweickert, 2016. "Government activity and economic growth – one size fits All?," International Economics and Economic Policy, Springer, vol. 13(3), pages 429-450, July.
    12. Sefa Awaworyi Churchill & Bin Peng & Russell Smyth & Quanda Zhang, 2022. "R&D intensity and income inequality in the G7: 1870–2016," Scottish Journal of Political Economy, Scottish Economic Society, vol. 69(3), pages 263-282, July.
    13. Falk Nathan & Train Kenneth, 2017. "Patent Valuation with Forecasts of Forward Citations," Journal of Business Valuation and Economic Loss Analysis, De Gruyter, vol. 12(1), pages 101-121, February.
    14. Li, Xiaogang, 2020. "Innovation, market valuations, policy uncertainty and trade: Theory and evidence," ISU General Staff Papers 202001010800009179, Iowa State University, Department of Economics.
    15. Stiglitz, Joseph E., 2015. "Leaders and followers: Perspectives on the Nordic model and the economics of innovation," Journal of Public Economics, Elsevier, vol. 127(C), pages 3-16.
    16. Lawrence Adu Asamoah & Francesco Figari & Andrea Vezzulli, 2021. "Spillover effects of innovation and entrepreneurial activity on income inequality in developing countries: A spatial panel approach," Regional Science Policy & Practice, Wiley Blackwell, vol. 13(5), pages 1661-1686, October.
    17. Kutuk, Yasin, 2022. "Inequality convergence: A world-systems theory approach," Structural Change and Economic Dynamics, Elsevier, vol. 63(C), pages 150-165.
    18. T. Gries & R. Grundmann & I. Palnau & M. Redlin, 2017. "Innovations, growth and participation in advanced economies - a review of major concepts and findings," International Economics and Economic Policy, Springer, vol. 14(2), pages 293-351, April.
    19. Sabrina Auci & Laura Castellucci & Manuela Coromaldi, 2021. "How does public spending affect technical efficiency? Some evidence from 15 European countries," Bulletin of Economic Research, Wiley Blackwell, vol. 73(1), pages 108-130, January.
    20. Emanuela Marrocu & Raffaele Paci & Marco Pontis, 2012. "Intangible capital and firms' productivity," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 21(2), pages 377-402, April.

    More about this item

    Keywords

    top income inequality; overall inequality; innovation; citations; knowledge spillovers;
    All these keywords.

    JEL classification:

    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • O34 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Intellectual Property and Intellectual Capital
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:92050. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Joachim Winter (email available below). General contact details of provider: https://edirc.repec.org/data/vfmunde.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.